TSMC Corporation is considering selling one of its old wafer fabrication machines. The machine, purchased for ($3,000,000)

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TSMC Corporation is considering selling one of its old wafer fabrication machines. The machine, purchased for \($3,000,000\) 5 years ago, had an expected life of 10 years and an expected salvage value of zero. Assume TSMC uses simplified straight-line depreciation (depreciation of \($300,000\) per year) and could sell this old machine for \($2,100,000.\) Also assume TSMC has an 18 percent marginal tax rate.

a. What would be the taxes associated with this sale?

b. If the old machine were sold for \($1,900,000,\) what would be the taxes associated with this sale?

c. If the old machine were sold for \($1,500,000,\) what would be the taxes associated with this sale?

d. If the old machine were sold for \($1,350,000,\) what would be the taxes associated with this sale?

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Foundations Of Finance

ISBN: 9781292318738

10th Global Edition

Authors: Arthur Keown, John Martin, J. Petty

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